One of the quirks of modern securities laws is how much you may get away with for those who crush small investors by promoting speculative penny stocks, and the way much heat you’ll attract for those who warn them about the dangers of these questionable stock pumps.
This appears to be what happened to a person named Andrew Left, a short-term seller of a certain banknote. Over the years, he has done an incredible job alerting the market, often on Twitter, to overvalued stocks and public corporations which are outright scammers. Then it “shorts” them – an investment technique where you borrow shares of the goal company and sell them. You earn cash, sometimes lots, whenever you repay the loan with stocks which have gone down in value.
It sounds complicated, even when it is not. Short selling has been around since we had the stock market. Regulators have traditionally loved it when short sellers caught stock traders – traders who promote dubious market fads and unrealistic business models, especially to unsophisticated investors.
But in today’s weird stock market, the Left and other people prefer it are the bad guys, the targets of federal crackdowns on alleged market abuse.
![In this file photo, a GameStop sign is displayed above a store in Urbandale, Iowa, on January 28, 2021.](https://nypost.com/wp-content/uploads/sites/2/2023/07/GameStop_CEO_99390-fa20b.jpg?w=1024)
Left’s legal odyssey highlights the dysfunction of the modern stock market that has and can make small investors the ultimate “bag owners”.
To get the full story, you’ve gotten to return to January 2021. COVID was still with us. People were in lockdown mode. Online trading has develop into commonplace. Novice investors needed research, and searching for recommendations on what stock to purchase, legions of them turned to the web and Reddit chat rooms for guidance.
Let’s just say that these usually are not the most credible places to do market research. They’re full of stock market touts who have the desire to make a fast buck. Then the madness of the crowds began. Stocks of distressed corporations like GameStop and AMC Theatres, traded under the symbols GME and AMC, traded at the dime level, then suddenly exploded in a chat buzz.
Joe’s average obsession
Small investors first became obsessive about these “meme stocks” because they were said to mean something – a meme where the average Joe could play a stock market game and outsmart some hedge fund pro. They were oblivious to the more despicable things that were occurring.
It didn’t matter much at the time. The seemingly infinite hype has driven these stocks to such a high level that it has triggered what’s often called a “short squeeze”.
Skilled traders like Left and others who thought GME and AMC were killing the market and closed them were forced to cover their short positions with heavy losses. One hedge fund, Melvin Capital, collapsed during the melee. Lewy and his hedge fund Citron Research, which has repeatedly warned that these stocks are trading at insane levels, narrowly escaped the same fate.
Small won; it was the shorts that became the road killer.
The triumph of these false losers can be the subject of an upcoming meme mania movie, perversely titled “Dumb Money”. I have never seen it, but a great summer movie of a meme-loving David killing a hedge fund, selling Goliath stock, might do well at an AMC theater, even when that is not how markets work in the future.
That is right, poor fundamentals from corporations like GME and AMC will at all times include time – and so they did. So did the Fed’s money printing and the government’s “stimulation” of the information checks that hit the markets. The meme party ended with a bang. Today, GME is down greater than 80% from its highs; AMC over 90%.
I’m undecided how the meme movie handles these non-trivial details, but many small investors stuck with GME and AMC through this demise, believing in social media pumping, and got crushed. From my reports, these so-called bag owners have lost a generational fortune.
![Closed Regal and AMC Empire 25 cinemas in Times Square, New York City due to the COVID-19 pandemic on Saturday, October 24, 2020.](https://nypost.com/wp-content/uploads/sites/2/2023/07/32400589.jpg?w=1024)
More necessary query: where is the regulatory crackdown on meme storage cracks? Nowhere so far as I do know. The truth is, regulators’ attention appears to be focused on short sellers – the same people in the market as the Left who warned against the madness of promoting meme stocks.
The left appears to be Public Enemy No. 1 on this bizarre crusade. The feds raided his home for evidence; he has a team of lawyers on standby, regardless that his meme stock alert and plenty of of his other studies were remarkably prescient, in line with the records.
Possibly the Left did something really incorrect. Bloomberg recently compiled a terrifying profile of his legal suspension, by which the feds refuse to say if and when they are going to pounce and for what.
![Andrew left](https://nypost.com/wp-content/uploads/sites/2/2023/07/2021-01-26T000000Z_1466552545_RC2UFL9XLI99_RTRMADP_3_GAMESTOP-CITRON.jpg?w=1024)
“If people cannot trade stocks and tweet their opinions, we lose the freedom of speech that’s at the core of the United States,” he tells me.
Greater Problem: The Department of Justice and the Securities and Exchange Commission look like oblivious to how markets work. Without short selling – and that is an increasingly dying art because of what happened with Left – you’ll need a market dominated by guys from one other movie.
That movie was The Wolf of Wall Street, featuring the real-life con artist Jordan Belfort, a unique generation stock trader who also cost his victims lots of money with false guarantees of untold riches if they only buy and hold shares for pennies.
The SEC and DOJ declined to comment.